Further Advance Mortgage Explained

If you need to raise extra money and you already have a mortgage, you don't always have to remortgage the whole thing. A further advance lets you borrow more from your existing lender, secured against your home, while leaving your current deal in place.

A further advance is additional borrowing taken from your current mortgage lender on top of your existing mortgage. It's often used to fund home improvements or consolidate debt, and it can be quicker than a full remortgage because you're staying with the same lender.

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Key Takeaways

• A further advance is extra borrowing from the lender you already have, kept separate from (but alongside) your main mortgage.
• It often sits on its own rate and term, which may differ from your current deal.
• The alternatives are a full remortgage or a second-charge mortgage from a different lender.
• How much you can borrow depends on your equity, affordability and the loan-to-value the lender will allow.

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What Is a Further Advance?

A further advance is an additional loan from your existing mortgage lender, secured against your property. You keep your original mortgage running on its current terms, and the further advance sits on top — usually on its own interest rate and repayment term.

Because you're borrowing more against the same home, the lender will reassess affordability and the property's value, and the extra borrowing increases your overall loan-to-value. To understand where you stand, it helps to know how much of the property you actually own outright, which we explain in how much equity do I have in my home?

What Can You Use It For?

Lenders will usually ask why you want the money. Common, widely-accepted reasons include:

• Home improvements — extensions, a new kitchen, or energy-efficiency work.
• Raising a deposit for a second property or to help family.
• Debt consolidation — though lenders scrutinise this carefully, because you're securing previously unsecured debt against your home.

Some purposes, such as funding a business or paying a tax bill, are treated more cautiously and not every lender will agree to them.

Further Advance vs Remortgage vs Second Charge

There are three main ways to raise money against a home you already own, and the right one depends on your existing deal and the rates on offer.

Further advance

You borrow more from your current lender. This can be quicker and cheaper on fees, and it avoids disturbing a good rate on your main mortgage. The downside is you're limited to what that one lender offers.

Remortgage

You move your whole mortgage — existing balance plus the extra you want — to a new deal, potentially with a different lender. This can make sense if your current rate is coming to an end anyway. Our guide to remortgaging to release equity walks through how this works, and if your property has gone up in value you may be able to borrow more at a better rate.

Second-charge mortgage

A separate loan from a different lender, sitting behind your main mortgage in priority. This can be useful if your current lender won't offer a further advance, or if remortgaging would mean giving up an unusually low rate.

Rates and Loan-to-Value

A further advance usually has its own interest rate, which may be higher or lower than your main mortgage depending on the deals available at the time. The total you can borrow is capped by:

• Your loan-to-value (LTV). Lenders limit how much of the property's value they'll lend against in total. Working this out is straightforward once you know your balance and the property value — see how to work out your loan to value.
• Affordability. The lender stress-tests whether you can afford the combined repayments.
• The lender's own rules on minimum and maximum advance sizes.

It's worth modelling what the extra borrowing would add to your monthly outgoings before you apply:

Pros and Cons

Advantages

• Often faster and lower on fees than a full remortgage.
• Keeps your existing mortgage deal untouched.
• All borrowing stays with one lender, which can be simpler to manage.

Disadvantages

• You're tied to what your current lender will offer, which may not be the best rate.
• It increases the total debt secured against your home.
• Consolidating short-term debt into a long mortgage term can cost more in interest overall, even if monthly payments fall.

Is a further advance the same as a second mortgage?

Not quite. A further advance comes from your existing lender, whereas a "second mortgage" (second charge) is a separate loan from a different lender that ranks behind your main mortgage.

Will a further advance affect my current mortgage rate?

No. Your original mortgage stays on its existing terms. The further advance is a separate loan with its own rate and term.

Can I get a further advance if my home has increased in value?

Often yes — a higher value improves your loan-to-value and may let you borrow more. The lender will usually revalue the property as part of the application.

A further advance can be a neat way to raise money without disturbing a good mortgage deal, but it's worth comparing it against a remortgage and a second charge before deciding. A broker can help you see which route is cheapest over the life of the loan.